Cabinet slaps 21% duty on import of power equipment

Discussion in 'Economy & Infrastructure' started by nrj, Nov 25, 2011.

  1. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    [FONT=verdana !important][/FONT]New Delhi: To discourage the purchase of cheap power equipment from China and to provide a level playing field to domestic manufacturers, the power ministry has proposed a 5% tariff on such imports from the neighbour.

    The plan may face flak from key ministries.

    The proposal, made in a draft note, was circulated to the ministries of finance, commerce and heavy industries, and the Planning Commission for comments on Wednesday.

    “It is not a good proposal,” said a commerce ministry official. “They are going back to what the committee of secretaries (CoS) said last July... We are not agreeing to the structure of their proposal.”

    An official in the department of heavy industries, too, said the draft note favours the CoS’ recommendations and not the suggestions of the Arun Maira committee. Heavy industries minister Praful Patel earlier this month said the ministry supported “the recommendations of the Maira committee”.

    Planning Commission member Arun Maira had recommended a 10% customs duty and a 4% special additional duty on power generation equipment imported from China to strike a balance between protecting local manufacturers and the need to import equipment to boost power production.

    The CoS recommended a 5% import duty on power equipment imports from China apart from a 10% countervailing duty and a 4% special additional duty. But under this plan, importers would have to pay only a 9% duty in most cases as the countervailing duty (CVD) would not be applicable.

    “CVD is to counter excise duty on power equipment. But as minimal excise duty is imposed on power equipment, hence, this virtually means CVD is not applicable on such imports,” the heavy industries ministry official said, adding that the government plans to implement the CoS’ proposal before the Union budget for the next fiscal year.

    “The power ministry in the draft has also said that it will be applicable from the day the cabinet passes the proposal,” said the official. “The draft should go to the cabinet in a month’s time.”

    Another heavy industries ministry official said the ministry broadly agrees with the draft note, but is yet to discuss it in detail. A power ministry official said the proposal is not meant for orders already placed. “One can’t have a change in policy with retrospective effect, but only prospectively,” he said on condition of anonymity.

    Domestic firms including Bharat Heavy Electricals Ltd and Larsen and Toubro Ltd have been lobbying with the government to limit imports of cheap equipment from China. Heavy industries minister Patel, after a meeting on 3 November with representatives of various ministries and these companies to discuss the matter, said, “Everybody agreed that there is a disadvantage to local manufacturers. We are proposing its (custom levies) roll-out in 2012.”

    At present, a 5% duty is levied on equipment imported for power projects with capacities less than 1,000 megawatts (MW). Equipment imports under the mega power policy for thermal projects of 1,000MW and above attract zero duty.

    The power ministry was not in favour of such a move until after the start of the 12th Five-Year Plan period (2012-17).

    The CoS last year agreed to impose the tariffs, but could not get a final clearance from the government.
    On 8 November, commerce secretary Rahul Khullar said a compromise formula had to be worked out as there were differences among departments on the issue.

    Sambitosh Mohapatra, executive director, PricewaterhouseCoopers, said the government has to strike a balance between its objective of achieving 75,000-100,000MW power generation capacity in the 12th Plan and the concerns of domestic manufacturers. “The government has to look at its larger objective of power generation capacity,” he said. “While it beefs up the domestic manufacturing capacity, it still has to depend on imports to meet the 12th Plan target. So the increase in import duty can be done in a phased manner.”

    Power utilities place orders overseas largely because of the inability of local manufacturers to meet growing demand.

    Chinese imports are relatively cheaper because equipment makers from that country benefit from low interest rates and an undervalued currency. Undervaluing the currency makes exports cheaper and increases the demand of products.

    India’s move to curb Chinese imports comes at a time when the two countries have been discussing ways to double bilateral trade to $100 billion by 2015 and to plug a yawning trade gap in China’s favour. Indian exports to China were valued at $19.6 billion in 2010-11 and imports from that country $43.5 billion.

    Ministry proposes 5% tariff on Chinese equipment - Economy and Politics - livemint.com
     
    Last edited: Jul 20, 2012
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  3. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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  4. LurkerBaba

    LurkerBaba Staff Administrator

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    Finally, some sense ! Telecom equipment should be next, but they don't have a domestic lobby :(
     
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  5. ejazr

    ejazr Stars and Ambassadors Stars and Ambassadors

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    Power industry is a strategic industry and this along with Telecom should have between 5-10 % tarrifs to allow local industries to survive and grow until they can compete internationally.
     
  6. Ray

    Ray The Chairman Defence Professionals Moderator

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    The tariff should be more.
     
  7. cir

    cir Senior Member Senior Member

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    Low interest rates? What low interest rates? Chinese rates are several times those in the West where rates are at historical lows.

    Under valued currency? Wasn't rupee the currency that is dropping like a stone in a vaccumn?

    Indian firms can't compete. Admit it!
     
  8. SPIEZ

    SPIEZ Senior Member Senior Member

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    Why not some parts of Micromaxx and a certain others brand which I forgot are made in India.
     
  9. tony4562

    tony4562 Tihar Jail Banned

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    India does not have a domestic telecom equipment industry to speak of. You don't go the Huawei route, well then only alternatives are those from the west, Alcatel, Eriksson, at twice price of course.
     
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  10. tony4562

    tony4562 Tihar Jail Banned

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    India does not have a domestic power equipment maker in the ereal sense either, all the designs are of fireign origin, all the parts including bolts and buts are of foriegn also, All india does, is to assemble them, that's not munufacturing. That's also the reason why goods with the so-called 'made-in-india' label are always way expensive than they should be.
     
  11. Tianshan

    Tianshan Regular Member

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    indian currency is already falling so far, so imports become more expensive anyway.

    country specific tarrifs are tricky.
     
  12. Rahul92

    Rahul92 Senior Member Senior Member

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    All these Chinese goods should have special duty called Dumping duty @ 25 % as they are just some cheap $h!t
     
  13. S.A.T.A

    S.A.T.A Senior Member Senior Member

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    While anti dumping measures against Chinese goods are welcome and in some cases long over due, we must guard against any tendency to leer towards adopting protectionist measures. We must guard our industry from unfair trade practices, but at the same time ensure we are not indulging Indian industries their inefficiencies.
     
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  14. no smoking

    no smoking Senior Member Senior Member

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    Actually, there is a better way to do that: don't buy it.
     
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  15. Tianshan

    Tianshan Regular Member

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    very true.

    they can do the right thing, and just stop buying our "cheap sh!t" products.

    but they keep buying them, because they are cheap, and then afterwards they complain that they are cheap.

    but as long as they keep handing over their hard earned money for it, then no complaints here.
     
  16. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    PowerMin for 14 pc import duty on power equipment - The Economic Times
     
  17. niharjhatn

    niharjhatn Regular Member

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    This would be fine if China adopted fair trade measures. Unfortunately, CCP uses unscrupulous tactics on a variety of fronts to put pressure on nations to buy their products - extending far beyond "economic" trade; dipping back into the Cold War rhetoric the CCP is so fond of.
     
  18. charlyondfi

    charlyondfi Regular Member

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    Very much agreed. Perhaps my Indian friends can help me on this, the discussion "basis": exactly which Indian sectors (who) will benefit from this so-called anti-dumping measure? and who will be the looser in it? rather a simple, general "protect our industry" statement
    -- let's take China out of this equation, but simply focus on Indians, as it's the key of discussion. I appreciate to learn your opinions as a foreigner. Thanks.
     
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  19. agentperry

    agentperry Senior Member Senior Member

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    though im not in favor of chinese export but India's domestic industry should be capable enough to make it cheap and reliable.
    i read in today's newspaper that those states in India like TN, AP etc are facing power cuts which were non-existent few years back.

    the policy paralysis and lack of balls to deal with protest and headless asshole tribals make situation worse. all the gains are undone now as the fuel and financial restraints restrict the govt and private sector to function properly.

    today only i read that ECL provided ntpc with 4 wagons of soil instead of coal. that means there is a big scam hidden in between.

    moreover im very much aware of the stopping of train mid-way in up, unloading of coal meant for ntpc, loading them onto trucks, and then selling them in black market by UP police.
    such things affect operations and in long run causes what India is famous for- failures
     
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  20. Nagraj

    Nagraj Regular Member

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    isn't power backbone and fuel of all industries ???
    a slight tax might be ok in long term.
    but i do hope we don't end up riddling our industries with inefficiencies.
     
  21. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    Quality is not the problem. Real issue is capability of domestic players to deliver according numbers in time. Can not really afford delays in powerplant setup due to slow supply. However I see public & private corporations lobbying together to implement these heavy duties on chinese equipment.

    btw where are we-want-to-save-domestic-industry crybabies now? They should be furiously backing this step, but............ anyways :rolleyes:
     

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